{"id":1445,"date":"2011-10-29T22:01:00","date_gmt":"2011-10-29T22:01:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/double-dip-part-ii_10281\/"},"modified":"2011-10-29T22:01:00","modified_gmt":"2011-10-29T22:01:00","slug":"double-dip-part-ii_10281","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/double-dip-part-ii_10281\/","title":{"rendered":"Double-Dip Dynamics, Part II: The new tenets of outsourcing – process standardization, global flexibility and better technology"},"content":{"rendered":"

For the very first time in my 16-year career, the major driver behind outsourcing is no longer immediate cost reduction.\u00a0Hallelujah. Praise the Lord.<\/strong><\/p>\n

In the vast\u00a0majority\u00a0of cases, sourcing buyers have already enjoyed a fair amount of cost-reduction<\/a> in recent years with their outsourcing initiatives, so they already expect the basic financials to work for many of the new endeavors they are exploring… hence, attention moves to other<\/em>\u00a0business\u00a0benefits that outsourcing can deliver.<\/p>\n

\"\"<\/p>\n

Moreover, most enterprises today that are experienced with outsourcing have already offloaded many of the\u00a0conspicuous<\/em>\u00a0costs with predominantly labor-based engagements, in areas such as software\u00a0maintenance\u00a0support, development and testing, and transactional accounting. \u00a0Their attention is now moving to other (and often more complex) processes and technology areas where they need to dig out real improvements<\/em>, and outsourcing can potentially provide that trigger.<\/p>\n

In days gone by, the old adage about outsourcing that many executives would often declare (off-the-record) has been “let’s take 30%+ off the bottom-line and if we can make some other business improvements with the exercise that’s a bonus, but let’s get the costs out.” \u00a0Today, they’re saying, “OK, we know where the cost-savings are with outsourcing, now let’s use the experience to get better process and technology for our business”.<\/p>\n

The impetus has changed – and while many outsourcing\u00a0engagements,\u00a0in the past, have largely fallen flat with delivering business benefits beyond<\/em> cost-elimination, clearly many executives are getting more experienced and skilled at driving sourcing\u00a0initiatives, and are confident they can use the\u00a0endeavor\u00a0as a change agent to promote and implement much-needed improvements to their business operations.<\/p>\n

Our\u00a0new study<\/a>\u00a0that covered the intentions and observations of 534 buyers, advisors<\/span> and providers with their sourcing strategies, in the event of a \u201cDouble-Dip\u201d Recession, reveals what is motivating buyers to outsource in this current climate, and while eliminating cost is still is a core fundamental, buyers are <\/span>even more focused<\/em> on achieving greater flexibility to scale their global\u00a0operations as a prime motivating factor:<\/p>\n

\"\"<\/p>\n

Why are these findings significant?<\/span><\/strong><\/p>\n

Buyers see little point persisting with their home-made operational processes and are tired of the excuses and inertia.<\/strong><\/span> \u00a0In days gone by, most buyers only wanted to take their existing mess have have it reproduced with the same workflows<\/span>, the same\u00a0spaghetti\u00a0code, the same quirks etc. \u00a0They would often declare “let’s lift it out, shift it over there and then see if we can transform it at some future point”.<\/span><\/p>\n

Many buyers have now had some version of failed lift and shift<\/em> on their unofficial outsourcing resum\u00e9s<\/span> today – they’ve realized that once they’ve shifted it, there’s little money, or board-level volition, left to invest in improving process and technology (<\/span>read here<\/a> for more on this topic). They know that their chance to rip out the rot is with<\/em> the lift and shift – not at some divine point in the future when corporate leadership is\u00a0suddenly\u00a0going to issue a holy decree that they are going to make process optimization their number one prority<\/span>. There’s more chance of Donald Trump appearing in a Just for Men commercial…<\/span><\/p>\n

Buyers being highly\u00a0motivated\u00a0to move to common\u00a0standards drives the development of Business Platforms.<\/strong>\u00a0<\/span> Most significantly, is the fact that 80% of buyers are willing to move onto standard processes. \u00a0They are unconcerned if their closest competitors use the same expense management or claims adjudication processes, the same cash applications or collections tools. \u00a0They simply want to adopt quality process flows they can deploy effectively and efficiently, if there is no competitive advantage to be gained that necessitates conducting those process in a certain unique manner.<\/p>\n

This is huge news for providers seeking to push more productized<\/span> and one-to-many (or at least one-to-few) utility offerings into the market. The ability to develop some best-in-class processes as <\/span>Business Platforms<\/a>, whether they focus on horizontal or vertical process clusters, is becoming a real differentiator<\/span> in the market, as buyers seek more standardized solutions from their outsourcing engagements. Moreover, more process standardization leads to more Cloud-based BPO services where clients can easily tap-into these Business Platforms without having to grapple with cumbersome on-premise software and and expensive licenses, or contend with resistance from awkward internal IT staff. \u00a0In short, buyers can start to look at moving from “A to C” with adopting quality standard processes and miss out much of that painful “B” phase (which is often where many get stuck unto perpetuity).<\/span><\/p>\n

Buyers are looking to globalize their business service management more\u00a0effectively.<\/strong><\/span> \u00a0The greatest single major-motivator driving outsourcing in today’s environment is this need to have more flexible global operations (43%). \u00a0Governance leaders are under increasing pressure to move onto single instances of ERP, and develop real end-to-end visibility across their global processes. \u00a0In olden outsourcing days, far too many organizations would operate their shared services under one management team, and often brought in elements of outsourced IT and business process into siloed<\/span> vendor management functions which often became disconnected from the broader shared services function. \u00a0Today’s shared services leaders know they need to integrate the outsourced services much more effectively with their existing processes in order to get anything close to achieving global process effectiveness. They are also highly cognizant of the fact that they can leverage outsourcing as a vehicle to achieving process\u00a0enhancements\u00a0that have been back-burnered<\/span> for years.<\/span><\/p>\n

Buyers want better technology support. \u00a0<\/strong><\/span>While in the past, much of the motivation behind ITO was simply to drive out the high cost of\u00a0maintaining\u00a0support services onshore, the onus has broadened to both<\/em> ITO and BPO engagements with buyers simply wanting better technology. You only have to look at the pain in the eyes of the long-suffering process-owners, still trying to develop a standard global template for their P2P processes and tie it to one instant of SAP, who still have to spend a fortune each year on\u00a0multiple\u00a0services firms to help with Nota<\/span> Fiscal, China’s Golden Tax or the Russian Tax Code – or simply wind up dropping huge<\/span>\u00a0hourly rates on SAP’s consultants to do it for them. \u00a0They’re fed up with it and patience is wearing thin, with many firms looking to get more bang for their buck when they look at their global outsourcing engagements. \u00a0At the same time, the leading providers are investing more than ever in global delivery to up their game with their clients. \u00a0Whether you’re looking for a global SAP build-and-run partnership, or a multi-process finance and procurement BPO, getting top grade IT support is now a major\u00a0differentiator. \u00a0“Good enough” is no longer an option.<\/span><\/p>\n

The Bottom-line: Buyers are more educated with outsourcing and looking for a whole lot more from the experience<\/span><\/strong><\/p>\n

Reading into this data confirms what most of us in the business are hearing and seeing everyday from buyers – they’re getting smarter about sourcing and are upping their expectations. \u00a0They also know they’re likely to be stuck at some end of an outsourcing engagement for most of their career, so they might as well figure out how to do this properly. \u00a0Gone are the days when you threw your provider under the bus in five minutes – you’re head is now on the block to make it successful for your organization, because it the engagement fails, you fail<\/em> and someone else will be drafted into your role to fix the mess. You don’t want a\u00a0reputation\u00a0for sloppy governance on that outsourcing\u00a0resum\u00e9<\/span>.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

For the very first time in my 16-year career, the major driver behind outsourcing is no longer immediate cost reduction.\u00a0Hallelujah….<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,50,51,835,847,79,81,86,836,91,832,830,837],"tags":[277],"organization":[],"ppma_author":[19],"class_list":["post-1445","post","type-post","status-publish","format-standard","hentry","category-business-process-outsourcing-bpo","category-captives-and-shared-services-strategies","category-cloud-computing","category-f-a","category-hfs-2011-double-dip-recession-study","category-hr-outsourcing","category-it-outsourcing-it-services","category-outsourcing-advisors","category-procurement-engineering-supply-chain-outsourcing","category-saas","category-sourcing-best-practises","category-sourcing-change","category-the-industry-speaks","tag-double-dip-recession"],"yoast_head":"\nDouble-Dip Dynamics, Part II: The new tenets of outsourcing - process standardization, global 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